The precise role of the highly variable coronavirus S protein in modulating innate immune responses remains unclear. In this study, we demonstrated that the mutant strain of swine coronavirus porcine enteric diarrhea virus induced significantly lower levels of double-stranded RNA (dsRNA) accumulation, inhibited protein kinase R (PKR) activation and suppressed stress granule (SG) formation compared with the classical strain. The 29th amino acid at N-terminus of S was identified as the key functional site for regulation of SG formation, and found that mutant S inhibited PKR phosphorylation and SG formation by upregulating adenosine deaminase acting on RNA 1 (ADAR1)-p150. Notably, the Zα domain of ADAR1-p150 was essential for inhibiting SG formation. Upregulation of ADAR1-p150 also reduced accumulation of dsRNA depending on its RNA editing function. Virus rescue confirmed that the mutant carrying a substitution at amino acid 29 failed to induce ADAR1-p150, leading to dsRNA accumulation, PKR activation and SG formation. Interestingly, the latest severe acute respiratory syndrome coronavirus-2 strains exhibit a novel 25PPA27 deletion at N-terminus of S that was also shown to lead to altered ADAR1-p150 expression and SG inhibition. The transcription factor TCF7L2 was identified as a player in S-mediated transcriptional enhancement of ADAR1-p150. This study is the first to clarify the crucial role of N-terminus of S in immune regulation of coronaviruses.